Just read the attached article from the New York Times. It explains it all. In short, we in the Western world are being outsold, outworked and outsmarted by our Eastern neighbors. They are willing to do whatever necessary to manufacture product in their own countries. Their innovation and work ethic are very, very impressive.
http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html